UPDATE 1-Johnson Controls profit up, to sell part of electronics business
DETROIT, July 18 (Reuters) - Johnson Controls Inc posted a stronger-than-expected quarterly profit on Thursday and said it would sell part of its auto electronics business for about $700 million.
The sale of the HomeLink product line to Gentex Corp is expected to close around the end of September. Johnson Controls said it expects to announce the sale of the rest of the electronics business before its next earnings report.
Johnson Controls, the largest U.S. auto parts maker, said it separated HomeLink from the rest of the electronics business to get the best possible deal.
HomeLink, a vehicle-based system that allows drivers to remotely activate garage door openers, entry door locks, home lighting, security systems and other products, has been integrated into Gentex products for more than a decade.
In April, Johnson Controls said the potential sale of its auto electronics business was in the early stages. In March, it hired JPMorgan Chase & Co to run the sale process, which analysts said could attract bids topping $1 billion.
People familiar with the process said last month that Johnson Controls was speaking with private equity firms about the business after interest from rival auto parts suppliers faltered.
Gentex, which makes automatic-dimming rearview mirrors and camera-based lighting and driver-assist systems, said the deal would boost its annual revenue by $125 million to $150 million.
Johnson Controls said net income rose 38 percent to $594 million, or 83 cents a share, in the fiscal third quarter, ended June 30, from $431 million, or 63 cents a share, a year earlier.
The company, which also makes car interiors and batteries, cited double-digit improvement in all its business segments and said its European auto business was profitable. Auto sales in Europe have hit 20-year lows, causing many companies in the sector to post losses, close plants and cut jobs.
Excluding one-time gains, Johnson Controls earned 78 cents a share in the latest quarter, 3 cents above what analysts polled by Thomson Reuters I/B/E/S had expected.
Revenue rose 2.4 percent to $10.83 billion. Analysts had expected $11 billion.
Johnson Controls narrowed the range of its full-year profit forecast, but the mid-point of the range remained unchanged. It sees earnings of $2.64 to $2.66 a share, compared with a previous forecast of $2.60 to $2.70.
It expects fourth-quarter earnings of 93 to 95 cents a share.